Smurfit Kappa share price rises after telling shareholders to “take no action”

Paper packaging giant Smurfit Kappa today urged its shareholders “to take no action” after rejecting a €8.6bn (£7.7bn) hostile takeover approach from rival International Paper.

Shares in the Dublin-based FTSE 100 firm rose around three per cent this morning after surging a fifth yesterday.

Smurfit announced International Paper’s approach on Tuesday morning, rejecting what it called an “unsolicited and highly opportunistic approach”. It had “superior prospects” independent of International Paper, Smurfit said.

International Paper set out the price of its offer on Tuesday evening. A €22 cash and 0.3028 new International Paper share offer would leave Smurfit shareholders with a 15 per cent stake in a merged organisation.

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Today, Smurfit said it had “already carefully considered” International Paper’s offer.

“[The board] has unanimously rejected it on the basis that it fails entirely to reflect the group’s superior prospects as an independent business and represents a valuation multiple significantly below recent comparable transactions.

“Shareholders are strongly advised to take no action.

“This announcement is made without the consent of International Paper.”

UBS analyst Mark Fielding said: “Both businesses are integrated paper and packaging companies, although International Paper has a wider paper business whereas Smurfit is more focused on the packaging segment.

We see somewhat limited synergy benefits between Europe and America based operations, but there would be synergies in the overlapping exposures within regions and as the packaging sector becomes more global it would create a world leader.

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